Three years after buying Chesterbrook corporate park and its 1.1 million square feet of office space, Rubenstein Partners is making progress on a $50 million repositioning of the suburban campus.
The Philadelphia real estate firm spent $10 million converting a vacant, 41,331-square-foot office building at 851 Duportail Road to house a fitness center, conference space, game room, café, indoor and outdoor lounge areas, and coworking. It is among the biggest additions under its plan to upgrade and lease vacant space in the office park.
Called the Circuit, it serves multiple purposes. The idea behind the standalone amenity center is to provide a central area and gathering place for tenants. Chesterbrook comprises 14 office buildings and, but for a network of trails that runs throughout the campus, few things tie the corporate community together.
The Circuit is also used as a tool to attract new tenants who like the idea of a corporate clubhouse or those firms or individuals who use the coworking space prior to becoming a full-fledged tenant in the office park.
“The amenity center was crucial in procuring the tenants we have signed,” said Steve Card, a principal at Rubenstein. “It was extremely important for these tenants to see construction go forward on it and now being able to tour new tenants through it.”
Roughly half of the space is dedicated to coworking and is a “huge” part of the philosophy behind proving such a robust amenity center, Card said. It can provide an early entry into the campus for a small group that may need space away from a main office or even swing space between leases. “It’s an attractive springboard for tenants who are growing,” he said.
Rubenstein also developed a parking deck on a lot between 725 and 735 Chesterbrook Blvd. and created some trail connections that weren’t there before.
In the time that Rubenstein has owned the campus, Chesterbrook’s occupancy has essentially remained flat. When it bought Chesterbook, Rubenstein was expecting vacancy to increase after AmerisourceBergen relocated out of 200,000 square feet into a new headquarters in Conshohocken.
The space had been 80% occupied in the summer of 2019 when it acquired the property and now stands at 83% as a result of 200,000 square feet of leases signed since the beginning of 2021, Card said. That included BNP Paribas taking nearly 60,000 square feet at 735 Chesterbrook Blvd. and Johnson & Johnson renewing on 120,000 square feet space at 965 Chesterbrook Blvd.
That the vacancy in Chesterbrook has held steady is a testament to the current state of the office market, with data pointing to the suburban markets faring better than central business districts. “The suburbs have been outperforming the urban markets,” Card said. “That is a trend that was not created by Covid but accelerated by Covid. In Philadelphia, it’s almost as if there was no slowdown.”